Correlation Between DSJA and Roundhill Video

Can any of the company-specific risk be diversified away by investing in both DSJA and Roundhill Video at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining DSJA and Roundhill Video into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between DSJA and Roundhill Video Games, you can compare the effects of market volatilities on DSJA and Roundhill Video and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in DSJA with a short position of Roundhill Video. Check out your portfolio center. Please also check ongoing floating volatility patterns of DSJA and Roundhill Video.

Diversification Opportunities for DSJA and Roundhill Video

-0.71

Correlation Coefficient

DSJA  Roundhill Video

Pay attention - limited upside

The 3 months correlation between DSJA and Roundhill is -0.71. Overlapping area represents the amount of risk that can be diversified away by holding DSJA and Roundhill Video Games in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Roundhill Video Games and DSJA is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on DSJA are associated (or correlated) with Roundhill Video. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Roundhill Video Games has no effect on the direction of DSJA i.e., DSJA and Roundhill Video go up and down completely randomly.

Pair Corralation between DSJA and Roundhill Video

Given the investment horizon of 90 days DSJA is expected to generate 0.3 times more return on investment than Roundhill Video. However, DSJA is 3.38 times less risky than Roundhill Video. It trades about 0.19 of its potential returns per unit of risk. Roundhill Video Games is currently generating about 0.0 per unit of risk. If you would invest  2,673  in DSJA on February 3, 2024 and sell it today you would earn a total of  310.00  from holding DSJA or generate 11.6% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	69.35%
Values	Daily Returns

DSJA  vs.  Roundhill Video Games

DSJA

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days DSJA has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong forward-looking indicators, DSJA is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

Roundhill Video Games

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Roundhill Video Games has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound basic indicators, Roundhill Video is not utilizing all of its potentials. The newest stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with DSJA and Roundhill Video

The main advantage of trading using opposite DSJA and Roundhill Video positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if DSJA position performs unexpectedly, Roundhill Video can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in Roundhill Video will offset losses from the drop in Roundhill Video's long position.

The idea behind DSJA and Roundhill Video Games pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Portfolio Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.